Fifty years of global FDI in five charts

In 1970, foreign investors put a net $12.4 bn into direct investment around the world. By 2024 the figure was $1.57 tn — roughly 127 times larger in current dollars. That headline growth is real, but it hides a story of booms, busts and, increasingly, money that moves through corporate structures rather than into factories. Five charts tell the story.

1. Three booms and a plateau

Global inflows climbed slowly through the 1970s and 1980s, then took off in the 1990s as privatisation, liberalisation and a wave of cross-border mergers gathered pace. They reached $1.57 tn in 2000, at the height of the dot-com era, before falling 53% to a low of $737 bn in 2003.

The second boom was bigger. Inflows hit $3.11 tn in 2007 — still the all-time high in this series — and then the global financial crisis cut them by 51% by 2009. Across 2010–14 they averaged $2.09 tn a year, 33% below the pre-crisis peak.

The third surge, in 2015–16, averaged $2.77 tn a year — 33% above the 2010–14 average. It was driven less by new plants than by large cross-border deals and corporate reorganisations, much of it routed through conduit economies. The reversal was just as sharp: inflows sank to $1.11 tn in 2018, a drop widely attributed to US multinationals repatriating accumulated foreign earnings after the 2017 US tax reform, which shows up as negative reinvested earnings.

The pandemic took inflows from $1.94 tn in 2019 to $1.19 tn in 2020 (−39%), before a 112% rebound in 2021. Since then the series has been volatile: 2024 came in at $1.57 tn, 50% below the 2007 peak, and the average over the past ten years ($1.90 tn) is below the level reached before the financial crisis.

2. Relative to the world economy, FDI has shrunk

Scaling by world GDP strips out inflation and economic growth. On that measure, inflows went from 0.5% of world GDP in 1970 to a peak of 5.3% in 2007. In 2024 they stood at 1.4% — about four times smaller than at the peak. Some of that decline is genuine — fewer mega-deals, more caution about supply chains — but part reflects the unwinding of financial structures that inflated the earlier figures.

3. Rich economies drive the swings

Almost all of the boom-and-bust pattern comes from high-income economies, where most mergers, financial centres and corporate restructurings sit. Inflows to low- and middle-income economies have been far steadier.

4. Developing economies' share has risen

In 1970, low- and middle-income economies received 25% of world inflows. Their share averaged 21% in the 1990s and 30% in the 2010s, peaking at 53% in 2018. In 2024 it was 30%. Be careful with the peaks: the share tends to jump in years when flows to rich economies collapse, not only when flows to developing ones rise.

5. Who received the most in 2024

The United States was the largest recipient in 2024, with $297 bn — 19% of the world total. The ten largest recipients together took 65%. The top 15 includes 4 economies commonly described as international financial centres (Singapore, Hong Kong SAR, Luxembourg and the British Virgin Islands). Some host substantial real activity, but large flows into such centres often pass straight through to other countries. At the other end of the table, 20 economies recorded negative net inflows, where disinvestment or loan repayments to foreign parents exceeded new investment.

What to take from this

• Headline peaks exaggerate. The largest years in the series coincide with merger waves and corporate restructuring, not necessarily with more factories, mines or offices.
• Scale matters. As a share of the world economy, FDI is well below its peak — a useful corrective to records in nominal dollars.
• Developing economies are steadier recipients. Their inflows swing far less than those of rich economies, and their share of the total has risen over the long run.